Daily fraud update: 15th October

Chris Lee

Former US student pleads guilty to Ponzi scheme

A man who formerly studied at a leading US university has pleaded guilty to managing a Ponzi scheme out of his student frat house.

Syed Arham Arbab, who is 22-years-old and lives in Augusta in the state of Georgia, managed to pull off the scheme which defrauded almost 120 people while he was a student at the University of Georgia.

He managed to accrue around $1m as part of the fraud, which was operated from the fraternity house – which is an American, all-male form of student living – in the Athens area of Georgia.

He was a student at the University of Georgia at the time.

According to press reports, he later spent the cash on a number of personal spending items including entertainment and clothing.

The scam is believed to have been perpetrated between May of 2018 and May of 2019.

As part of the fraud, Arbab persuaded traders that he had a number of prestigious people investing in his organisation, including a former member of the US National Football League.

Alleged text messages from Arbab revealed that he supposedly said to potential investors that the company he ran was “different because we target young investors/college kids”.

According to Charlie Peeler, who is the US Attorney for the Middle District of Georgia, the victims of the scam were “unwitting investors”.

“The defendant engaged in a pattern of deceit to gain the trust of unwitting investors who gave him their hard-earned money for what they believed was a sound investment”, he said.

Arbab will be sentenced in January.

More people accused of binary options scam

More people from Israel have been accused by the US authorities of playing a part in binary options scams in the country and around the world.

The Securities and Exchange Commission (SEC) has in recent months targeted the industry in Israel.

Binary options have been widely discredited in the wider forex and crypto industries as fraudulent.

Now, two men – 34-year-old Anton Senderov and 37-year-old Lior Babazara – have been accused by the Securities and Exchange Commission of running two fraudulent binary options sites.

One was called IvoryOption.com, while the other was called lbinary.com.

Overall, the pair are accused of scamming almost 3,000 US-based traders.

They are believed to have accrued over $5m as part of the scamming.

The timeframe for the allegations begins in January 2014 and ends in August 2017.

The pair are accused of committing their crimes via a firm called LianTech.

“LianTech used LBinary and Ivory Option to fraudulently make unregistered offers and sales of binary options that referenced well-known securities to investors in the United States”, the SEC said in its accusation.

“The Defendants, operating from Israel, controlled these activities and thereby directly or indirectly offered and sold binary options to United States investors through these entities”, it said in a further accusation.

Chris Lee

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